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Original poster

Gifted deposit - need advice please!!

28 replies

faffalotty · 04/08/2016 13:43

My parents are helping me out with buying a house - I'm buying my first house on my own (divorce) but I'm not a first time buyer. The money is a gift, they are not lending it to me. i'm also using equity from family home and a mortgage (agreed in principle).

I had thought that they could just pay the money into my account and then I would pay it wherever it needs to go on completion. However, on the documents from the solicitor they are talking about gifted deposits and wanting to see evidence of the money and ID. I think this may also be a factor with getting a mortgage?

So do I have to declare this all as a gifted deposit, are there any potential issues with doing this? My parents do not live locally so can't just pop in to the solicitors with ID and I don't know how they will feel about providing evidence of the money.

A quick google seems to refer to gifted deposits as being a 10/20% deposit for first time buyers which doesn't apply to me.

I'm trying to get the sale through as quick as possible and was going to take documents to the solicitors today.

Can anyone offer any advice please?

OP posts:
PolterGoose · 04/08/2016 13:56

This reply has been deleted

Message withdrawn at poster's request.

Nervybuyer2016 · 04/08/2016 13:57

Yes that's correct, it's for money laundering purposes iir. They will need to sign a letter to say it's a gift And have no interest in the property. Out broker verified parents ID. Hth!

Original poster
faffalotty · 04/08/2016 14:00

ok, thanks that doesn't sound too onerous. So the solicitors and the bank will probably have a standard form for them to complete?

OP posts:
Scribblegirl · 04/08/2016 14:04

Yep, our solicitor had standard wording. It was just:

FAO: [bank name]

We, [Dad name and mum name] hereby gift [amount] to [our names] for the purchase of [property address].

We confirm that we will have no interest in the property following this gift and the subsequent completion of the sale.

[signatures]

Good luck!

liquidrevolution · 04/08/2016 14:06

Yup I had to get this done when my parents gave me some money towards deposit.

Just a letter which I scanned and sent through. They didnt even want to original.

MovingOnUpMovingOnOut · 04/08/2016 14:07

We did this a year ago. The solicitor needed additional documents to evidence the money wasn't laundered. Quite right too.

So as it was my parents they had to provide evidence of where they money came from (some sort of endowment payout I think), where it went (bank statement) and then I provided evidence it had come to me (my bank statement showing transfer). My parents were also required to write a letter from both of them (because the money had gone via a joint account - I think this was slight over kill as they were each entitled to spend anything they liked out of a joint account with either signature) confirming it was a gift*. They also had to provide their own ID to prove they were them. They did this by getting a local solicitor to make notorised copies of passports and driving licences and sending this to my solicitor.

It was only a massive faff because my solicitor didn't bloody read anything until the day before exchange and then decided he needed something different to what was provided due to old style driving licences and just one signature on the letter. That was a pain but entirely due to his incompetence.

*Technically it's a loan because I'm going to pay it back but that was going to cause problems with the mortgage company so my parents "gave" us the cash.

MovingOnUpMovingOnOut · 04/08/2016 14:07

Your solicitor should give you the wording to use.

Iamdazedandconfused · 04/08/2016 14:10

For the ID, if your parents can drop into a solicitors firm that is local to them, their local solicitors should be able to certify their ID and forward the certified copy to your solicitor Smile

Original poster
faffalotty · 04/08/2016 14:12

Thank you for all the replies

Regarding the mortgage - I'm thinking I should gt this letter sorted before I go to the appointment at the bank? it's so difficult to get hold of somenoe to ask - not like the old days when you could actually phone directly into a branch!

OP posts:
ImYourMama · 04/08/2016 14:16

I'm a mortgage adviser- all this means is you need a letter from your parents saying 'this is a gift and we do not expect to be repaid' / the solicitor will want their ID for anti money laundering :) nothing to worry about and won't affect the mortgage

Original poster
faffalotty · 04/08/2016 14:20

Thanks - so the bank won't want any ID or evidence?

OP posts:
Pepsioften100 · 04/08/2016 14:33

I just did this with my fiancé. Didn't need ID or anything just a letter saying gifting for purchase of house and no repayment expected/not a loan. :) everyone was happy with that.

ImYourMama · 04/08/2016 14:41

Just a letter stating the gift :)

YelloDraw · 04/08/2016 15:10

As everyone else has said - totally normal.

Just a signed letter saying "I [name] am gifting [your name], my daughter, an amount of £[x]."
You'll need that for mortgage pffer and also solicitors.
Solicitors will also need ID - but they probably don't need 'certified ID'. So a photo of driving license will be fine.
Solicitors will also want a copy of your parents bank statement showing the to be gifted amount.

YelloDraw · 04/08/2016 15:10

Thanks - so the bank won't want any ID or evidence?

Bank won't, just the letter.

Solicitor will as per my post above :-)

kirinm · 04/08/2016 15:37

We've just done this. I googled the wording and sent photocopies of MIL's passport and driving license for ID purposes.

Lina11 · 07/07/2017 16:44

Hello, didn't want to create another thread.
To full deposit we need 6k, my friend was willing to give that to me, cause he is moving with us once we've got house, so that would be like years rent, but reading how much paper work needs to be done... Thinking just to ask my friend who is running the company to transfer money we need. My partner is labourer, and company does similar stuff, so it will be like a salary. Do you think this is better than declaring a gift? And what proof do we need, if any?
Thank you

wowfudge · 08/07/2017 06:22

No I don't. Especially if the friend is going to live with you. Is this money actually a gift or is he paying the rent upfront so that you have enough for the deposit? If that is what is actually happening then as your friend I would be wary of signing something which said the money was a gift when it's actually my rent in advance.

From a mortgage lender's pov, money from someone who is going to live there would imply that person has a stake in the property so it needs to be documented that they don't.

Pretending your partner has been paid by the friend just sounds dodgy - what about tax, a wage slip for the money, etc. You will need to show the mortgage company where that money has come from.

The rules are there to protect everyone and to prevent money laundering.

Lina11 · 08/07/2017 11:57

Money would be a years rent, and we thought making rent agreement, but once I told that to broker, he said, that this might not work and we have to declare it as a gift, my friend is not sure.. That is why I thought would be better just getting money from other friend, my partner is self-employed and we would return tax at the end of year. All complicated... What about if I just put cash into bank account, saying that these are my savings which I brought when I came to live to UK?

wowfudge · 08/07/2017 13:33

It's up to you but I wouldn't be comfortable lying and I wonder if you can actually afford to buy a house. Maybe it would be better to continue to save and wait a while.

Lina11 · 08/07/2017 14:42

Yes, we can afford to buy a house. We have saved 14k in 6 months plus paying rent of 500. Mortgage repayments will look like a joke comparing what we have put each month towards deposit. There is no time to wait, landlords expecting second baby and they asked us to move out in three months, so they will have some time to prepare our room according to their needs. I just need to declare 1/5 of deposit in some way..

Spickle · 08/07/2017 16:45

How about you all buy the property as tenants in common and have a Declaration of Trust drawn up in the following splits:
2/5 You
2/5 DP
1/5 Friend
And let friend be on the mortgage too, therefore being a 1/5 owner.

Lina11 · 08/07/2017 17:47

That would be an option if we would be struggling to save the deposit, but in this situation we probably will be able to give that back before we even move.

Spickle · 08/07/2017 18:37

Alternatively, since you say were able to save £14k in six months, I assume you can save £7k in three months. Conveyancing takes on average three months anyway, so by the time you reach completion, you should have enough money for the full deposit and your lodger pays rent in the normal way.

Lina11 · 08/07/2017 22:43

That is what I was planning to do at first, but AE broker wants to see deposit now. When I went to HSBC to do agreement in principle, they said that they do not need to see deposit on application day. I was told it is more for the solicitors..